SIP registration time has reduced drastically as fund houses start adopting National Automated Clearing House system.
Gone are the days when SIP registration took almost a month.
With the advent of National Automated Clearing House system (NACH) platform developed by National Payment Systems Corporation India (NPCI), transacting in mutual funds has become much more convenient and faster.
NACH is an online end-to-end electronic system which helps fund houses register SIP mandates swiftly. The concept is new to India, having become operational in December 2012.
Currently registering a SIP ECS mandate takes 21 to 30 days and there is no process to track if the ECS has been confirmed at the bank’s end. The new system helps fund houses to register SIP mandates in just five days.
Earlier distributors had to register multiple mandates if their clients wanted to invest through SIP in say four different schemes. With the new system, distributors can register four SIPs through one mandate. The process has become simpler even in case of lump sum investments.
NACH can be utilized to pay utility bills, insurance premiums and mutual fund SIP ECS.
Five fund houses – DSP BlackRock, UTI, Pramerica, HSBC and Reliance have joined NACH platform so far. ICICI Prudential is also evaluating the technology.
Based on this technology, DSP Black Rock recently launched a One Time Mandate (OTM) facility which virtually eliminates any paperwork while investing. OTM allows an investor to authorize his/her bank to debit up to a certain amount daily based on the instructions given to DSP BlackRock Mutual Fund.
“If an investor wants to invest in five different schemes, he’ll have to write five different cheques. This is cumbersome. Also we have been told by our distributors that at times a client is willing to invest but he may not be carrying a cheque book and therefore an investment opportunity is lost for the investor, the distributor and the Mutual Fund,” said Gaurav Nagori, Senior Vice President, Head of Client Response & Operations, DSP Blackrock MF in an earlier interview with Cafemutual.
Even if investors wish to transact physically (by filling up a transaction slip) they need not cut a cheque. In case investors are investing through DSPB’s website they don’t need to use internet banking or debit cards and they can they instead can use the OTM facility. Even internet banking facility is not required.
Further, net banking has restrictions on the number of transactions one can do which is not the case with NACH.
More recently, Pramerica has launched a facility called ‘Anywhere Transact’ based on the same platform which allows investors to invest in multiple ways. Investors can make a transaction through a phone call or through SMS. Investors need to register for this facility by authorizing a debt mandate. Investors get a SMS and email from fund houses after every transaction.
Once registration is done, investors can invest through phone, SMS or through internet.
With the new technology in place, even investors who don’t have smart phones can transact by simply sending an SMS.
It is not that investors did not had an option to invest through SMS or phone call earlier. However, the earlier methods of investing through SMS or phone call required investors to remember their folios and scheme codes. Many fund houses had launched mobile based applications which allowed investors to transact through their phones. However, one drawback of these mobile applications was that investors were required to have smart phones with internet connection. Moreover, there were certain restrictions on the number of folios and schemes one could transact in.
With fund houses having fixed some of these flaws of ‘anywhere transacting’, the investment process is likely to become much smoother for investors and reduce paperwork for distributors.
